Reform would aid Africa more than money

July 6, 2005

Freedom Newspapers

President Bush is likely to have a tough time at the G-8 summit meeting this week. British Prime Minister Tony Blair, who is president this year of the group of political leaders from the United States, Great Britain, France, Germany, Canada, Italy, Japan and Russia, wants to focus on global warming and, as the sponsors of last weekend’s Live 8 rock concerts put it, “making poverty history” in Africa.

It is not in the United States’ interest to give in to “world opinion” on either issue. If President Bush gives in on either issue, French President Jacques Chirac and German Chancellor Gerhard Schroeder, and others, will be able to claim a victory. If he doesn’t, they can bash Bush for keeping Africa impoverished and encouraging eco-disaster.
Given that lose-lose scenario, President Bush would do well to adopt a contrarian position.

Poverty in Africa is unquestionably real and heartrending. But if sending aid to the continent were the key to success it would be well on the road to prosperity by now. Between 1960 and 2005 foreign aid worth more than $450 billion (inflation-adjusted) flowed into Africa. But between 1975 and 2000, African gross domestic product per capita actually declined, at an average annual rate of 0.59 percent.

The problem in most of Africa is not lack of resources, lack of entrepreneurs or the legacy of colonialism. It is poor governance. Most African governments are run by corrupt rulers who see governing as a way to seize resources for themselves and their families, tribes and political supporters. Aid tends to be frittered away on useless projects or squirreled away in Swiss bank accounts.

There are exceptions. As Rep. Ed Royce of Fullerton, Calif., who headed the African affairs subcommittee for eight years, said recently, Botswana protects private property rights and has an independent judiciary. Its score on reports judging economic freedom has improved steadily since 1980. And while per capita GDP in the rest of Africa has been declining, in Botswana it has grown at an average annual rate of 4.58 percent since 1980.

Other African countries that have increased economic freedom and improved economic performance, according to Rep. Royce, include Mozambique, Uganda, Tanzania and Mauritius.

Unfortunately, pouring more aid into Africa is likely to delay rather than hasten the day when other African countries catch on and change their policies.

The best way the United States can help Africa is to end domestic farm subsidies and reduce tariff barriers on key products like cotton, cocoa, coffee, tea, tobacco and dairy goods. If President Bush says this at the G-8 meeting it will be a sign that maybe he gets it.